For personal use only - Nick Scali · Related party transactions 38 Note 29. Events after the reporting period 39 Note 30. Share-based payments 39 ... (Auckland, NZ). Following a

Annual Report 2018

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

VITORIO 100% Leather 2.5 Electric Recliner with Chaise SOHO Dining Table DARBY & VOSKA Dining Chairs

TANGIA Armchair TALLIN Coffee Table GLITZ Floor Rug TWEETY Pendant Lights TRIPY Floor Lamp ALIA Floor Lamp

For

per

sona

l use

onl

y

Nick Scali Limited Annual Report 20182

FRIDA Fabric 3 Seater Lounge

For

per

sona

l use

onl

y

Nick Scali Limited Annual Report 2018 3

Page

Chairman and Managing Director’s Review 5

Directors’ Report 6

Auditor’s Independence Declaration 16

Consolidated Statement of comprehensive income 18

Consolidated Statement of financial position 19

Consolidated Statement of changes in equity 20

Consolidated Statement of cash flows 21

Directors’ Declaration 43

Independent Auditor’s Report 44

Shareholder Information 48

Corporate Information 51

Page

Notes to the consolidated financial statements Note 1. Basis of preparation 22

Performance for the yearNote 2. Segment Information 23Note 3. Revenue 23Note 4. Expenses 24Note 5. Income tax expense 25Note 6. Earnings per share 26Note 7. Equity – Dividends 26Note 8. Reconciliation of profit after income tax

to net cash from operating activities 27

Operating assets and liabilities Current assets Note 9. Current assets – Cash and cash equivalents 28Note 10. Current assets – Receivables 28Note 11. Current assets – Inventories 28Note 12. Current assets – Other financial assets 28Non-current assets Note 13. Non-current assets – Property, plant

and equipment 29Note 14. Non-current assets – Intangibles assets 30Current liabilities Note 15. Current liabilities – Borrowings 31Note 16. Current liabilities – Payables 31Note 17. Current liabilities – Provisions 31

Non-current liabilities Note 18. Non-current liabilities – Borrowings 32Note 19. Non-current liabilities – Provisions 33

Capital structure and finance cost Note 20. Equity – Issued capital 33Note 21. Equity – Reserves 34Note 22. Financial instruments 35Note 23. Fair value measurement 37

Other Notes Note 24. Key management personnel 37Note 25. Remuneration of auditors 38Note 26. Contingent liabilities 38Note 27. Commitments 38Note 28. Related party transactions 38Note 29. Events after the reporting period 39Note 30. Share-based payments 39Note 31. Parent entity information 40Note 32. Controlled Entities 41Note 33. Summary of significant accounting policies 41

Contents

For

per

sona

l use

onl

y


GUADIANA Solid Oak Dining table with MUNI and MICAH Dining Chairs

For

per

sona

l use

onl

y


Operating Performance

We are pleased to report that Nick Scali has had an excellent

year, delivering yet another successive year of revenue and

profit growth and with earnings per share increasing 10.1%

to 50.6 cents per share. This result was primarily driven by our

continued new store rollout program, which saw six new stores

open during the year, including the first store in New Zealand.

Sales revenue increased by 7.7% to $250.8 million, with a full

year of revenue contribution from the four stores opened in

FY17 and a part contribution from the six stores opened during

FY18. Gross margin increased by 20 basis points to 62.7%

with a focus on inventory control and operating expenses

reduced from 38.9% of sales to 38.1%, due to continued tight

cost control and Nick Scali’s ability to drive revenue growth off

the existing infrastructure.

Cash flow generation remained strong, with operating cash

flow for the year of $43.1m. The strong balance sheet and

effective working capital management, results in the Company

being well placed to continue to grow the existing business

and to take advantage of any investment opportunities that

might arise.

Other notable achievements during the year included the

relocation of our head office from Lidcombe to more suitable

premises at North Ryde, the acquisition of our store property in

Auburn (NSW), the roll out of a new website and the transfer of

our NSW distribution operation to a new purpose built facility

in Horsely Park.

Store network

Six Nick Scali Furniture stores were opened during the year,

bringing the total number of Nick Scali Furniture stores at 30

June 2018 to 51. Stores in Robina (QLD) and Cannington

(WA) opened during the first quarter of the financial year, with

a further four stores opening at the end of the second quarter

of the financial year on Boxing Day in Toowoomba (QLD),

North Lakes (QLD), Marden Park (NSW) and Mt Wellington

(Auckland, NZ).

Following a strategic review during the year, the Sofas2Go

brand was discontinued. Four of these Sofas2Go stores

have been rebranded as Nick Scali Clearance stores, which

has proved to be an excellent initiative, whilst the fifth store

was closed.

The Company expects to open up to six new stores during

FY19, including the Morayfield (QLD) store that opened in July

2018. Five of these new stores are expected to open in the

first half of the financial year, including a second New Zealand

store in Hamilton.

Dividends

The Directors have declared a fully franked final dividend of

24 cents per share, bringing the total dividend for the year to

40 cents per share. The final dividend has a record date of

3rd October 2018 and will be paid on 24th October 2018.

The Directors consider that the dividend payout ratio of 79%

appropriately balances the distribution of profit to shareholders

and reinvestment of earnings for future growth.

Board

During the year, Mr Stephen Goddard was appointed to the

Board as an independent non-executive director. Stephen

is an experienced retailer, having previously held a broad

range of senior executive positions and currently serves as a

non-executive director for three other listed companies. We

welcome Stephen to the Nick Scali team – his appointment

will add a wealth of experience to the Board in guiding the

operations of the Company.

Outlook

The Company intends to launch a new bedroom and bedding

product category in 28 of its larger stores in January 2019.

We expect FY19 to benefit from the increase in the store

network established during FY18 and to a lesser extent those

stores to be opened in FY19.

The abovementioned achievements and the excellent financial

results are the result of the hard work of our many employees

and associates across Australia and New Zealand, and we

thank them for their contribution and commitment to the

Company.

The Board would also like to take this opportunity to thank

our shareholders, customers and suppliers, whose continuing

support underpins the ongoing success of the Company.

Chairman and Managing Director’s Review

For

per

sona

l use

onl

y


The directors present their report, together with the financial

statements, on the consolidated entity (referred to hereafter

as the ‘Group’ or ‘consolidated entity’) consisting of Nick Scali

Limited (referred to hereafter as the ‘Company’ or ‘parent

entity’) and the entities it controlled at the end of, or during,

the year ended 30 June 2018.

DirectorsThe names and details of the Company’s Directors in office

at any time during the financial year or until the date of this

report are as follows. Directors were in office for this entire year

unless otherwise stated.

John W Ingram

Greg R Laurie

Carole A Molyneux

Stephen T Goddard (appointed 01 March 2018)

Anthony J Scali

Principal activitiesThe principal activities of the consolidated entity during the

year were the sourcing and retailing of household furniture and

related accessories.

No significant change in the nature of these activities occurred

during the year.

DividendsDividends paid during the financial year were as follows:

2018 2017 $’000 $’000

Final franked dividend for 30 June 2017:

20.0 cents (2016: 14.0 cents) 16,200 11,340

Special franked dividend for 30 June 2017:

Nil cents (2016: 3.0 cents) – 2,430

Interim franked dividend for 30 June 2018:

16.0 cents (2017: 14.0 cents) 12,960 11,340

29,160 25,110

In addition to the above dividend, since the end of the financial

year directors have declared a fully franked final dividend

of 24.0 cents per fully paid ordinary share to be paid on

24 October 2018 out of retained profits at 30 June 2018.

Operating and financial reviewNick Scali Limited is a furniture retailer operating in Australia

and New Zealand. During the year, the Group operated two

brands; Nick Scali Furniture and Sofas2Go, which operated

under the same infrastructure provided by the Group.

Following a strategic review of the business during the year,

the business was consolidated and the Sofas2Go brand was

discontinued with the five stores closed or rebranded as Nick

Scali Furniture stores.

Group Operating Results

2018 2017 % Change $m $m Revenue 250.8 232.9 7.7%

EBITDA 62.8 55.7 12.7%

EBIT 59.0 52.9 11.6%

NPAT 41.0 37.2 10.1%

EPS (cents) 50.6 46.0 10.1%

DPS (cents) 40.0 34.0 17.6%

Net Cash 2.9 18.8 –84.5%

For the financial year ended 30 June 2018 the Group reported

a record NPAT result of $41.0m, up 10.1% on the previous

year. Sales revenue increased 7.7% to $250.8m with the

increase derived from a full year’s contribution from the four

stores opened during financial year 2017 and a smaller

contribution from six stores opened during financial year 2018.

Same store sales were flat for the year.

Gross margins strengthened by 20 basis points to 62.7%

driven by efficiencies from supplier consolidation and volume

growth.

Operating expenses as a percentage of sales continue to

decrease due to the ability of the Group to leverage sales

growth through the existing distribution network.

Net cash flows from operating activities during the year were

$43.1m, up 0.3% on the previous year. Net cash outflows

from all activities were $3.4m after investment in fixed assets

of $28.8m. This included the purchase of a previously leased

store in Auburn (NSW) in December 2017, new store fitouts,

store refurbishments, the implementation of a new website

and warehouse management system in four of the Company’s

distribution centres.

Borrowings relate solely to property purchases and increased

by $12.5m to $33.7m due to the acquisition of the Auburn

store. With low debt and stable cash reserves (including

customer deposits) of $26.4m, the Group is well positioned to

take advantage of opportunities that may arise.

Net Assets were $83.7m as at 30 June 2018, up $13.3m on

last year.

Store networkDuring the year, the Group opened six new Nick Scali Furniture

stores in Robina (QLD), Cannington (WA), North Lakes (QLD),

Toowoomba (QLD), Marsden Park (NSW) and the first store in

New Zealand, in Auckland.

The Group has confirmed a further six new stores in financial

year 2019, with five of these opening in the first half of the

financial year. One of the six will be the second store to open

in New Zealand. This will result in a total store network of 60

stores by December 2018.

Directors’ Report

For

per

sona

l use

onl

y


Directors’ Report (continued)

PeopleThe Group remains committed to delivering industry best

practice across all facets of the business by recruiting and

retaining the best in the industry. All employees continue

to be developed through a suite of training and leadership

development programmes combined with detailed

performance assessment. Competitive remuneration

packages incorporating both short and long term incentives

ensure that good performance is appropriately rewarded and

talent is retained.

The Group has a policy of equal opportunity and advocates

diversity in the workplace. The supportive culture underpins

the wellbeing of the staff and there are rigorous occupational

health and safety practices in place. The Group’s human

resource and remuneration strategies are designed to ensure

that Nick Scali Furniture remains an employer of first choice in

its retail sector.

Outlook and risksThe Group operates in a competitive retail market which is

subject to only moderate barriers to entry and changing

consumer preferences. However, the Directors continue to

believe that the Group is well placed to maintain its market

leading position as a result of the robust strategies and

structures that are currently in place.

Same store sales growth has been challenging during financial

year 2018 particularly given that the Group was cycling off

two years of double digit same store sales growth. Trading

since June has seen positive same store sales order growth,

which is encouraging given the difficult trading conditions

experienced in April and May.

At the end of the first half of financial year 2019 the Group will

add a new product category of bedrooms and bedding to the

range in selected stores, which is expected to generate further

sales growth over time.

The performance of the first store in New Zealand has been

extremely encouraging. With the second store opening

in October, New Zealand will begin to provide a positive

contribution. The good start in New Zealand has confirmed

that the product and brand acceptance there is better than

had been anticipated. The Group is confident that New

Zealand will generate significant profit growth in the future.

Significant changes in the state of affairsThere were no significant changes in the state of affairs of the

consolidated entity during the financial year.

Matters subsequent to the end of the financial yearApart from the dividend declared as discussed above, no

other matter or circumstance has arisen since 30 June 2018

that has significantly affected, or may significantly affect

the consolidated entity’s operations, the results of those

operations, or the consolidated entity’s state of affairs in future

financial years.

Likely developments and expected results of operationsRefer to the Operating and financial review on page 6.

Environmental regulationThe consolidated entity is not subject to any significant

environmental regulation under Australian Commonwealth or

State law.

The Directors are not aware of any particular or significant

environmental issues which have been raised in relation to the

consolidated entity’s operations during the financial year.

Information on directorsName: John W Ingram

Title: Independent Non-Executive Chairman

Qualifications: AM, FCPA

Experience and expertise:

John was appointed to the Board as non-executive Chairman

on 7 April 2004. John was formerly Managing Director of

Crane Group Limited.

Other current directorships:

Non-executive Chairman of Shriro Holdings Limited.

Former directorships (last 3 years):

Independent Director of Australian Super retired on

1 March 2017

Special responsibilities:

Member of the Audit Committee and the Remuneration and

Human Resources Committee.

Interests in shares: 310,000

Name: Greg R Laurie

Title: Independent Non-Executive Director

Qualifications: BCom, FAICD


Greg was appointed to the Board on 7 April 2004. He has

extensive experience in manufacturing and distribution

industries, and was the Finance Director of Crane Group

Limited from 1989 until his retirement from that role in

2003. Greg has been Chairman of various Audit and Risk

Committees since 2004.


Independent Non-Executive Director of Shriro Holdings

Limited and Independent Chairman of Big River Industries

Limited.


Independent Non-Executive Director of Bradken Limited


Chairman of the Audit Committee and a member of the

Remuneration and Human Resources Committee.


For

per

sona

l use

onl

y


Directors’ Report (continued)Name: Carole A Molyneux



Carole was appointed to the Board on 26 June 2014. She

has extensive experience in retail and was the Chief Executive

Officer of Suzanne Grae, (part of the Sussan Retail Group), for

eighteen years until 2013.


Independent Non-Executive Director of White Ribbon Australia


None


Chairman of the Remuneration and Human Resources

Committee and member of the Audit Committee.

Interests in shares: Nil

Name: Stephen T Goddard



Stephen was appointed to the Board on 01 March 2018.

Stephen is an experienced retailer having held a broad range

of senior executive positions in the industry. These include

Finance Director and Operations Director for David Jones,

founding Managing Director of Officeworks, and various senior

management roles with Myer.


Independent Non-Executive Director of JB Hifi Limited (JBH),

GWA Group Limited (GWA) and Accent Group Limited (AX1).


Independent Non-executive director of Pacific Brands and

Surfstitch Group Limited (SRF).


Member of the Audit Committee and Remuneration and

Human Resources Committee.


Name: Anthony J Scali

Title: Managing Director

Qualifications: BCom


Anthony is Managing Director of Nick Scali Limited. He joined

the Company full-time in 1982 after completing his Bachelor

of Commerce degree from the University of New South Wales.

Anthony has over 30 years’ experience in retail, and the

selection and direct sourcing of product from manufacturers

both in Australia and overseas.


None


None


As Managing Director Anthony is responsible for the

development and implementation of the Company’s strategy

for growth, as well as the overall operation of the business.

Interests in shares: 11,039,474

‘Other current directorships’ quoted above are current

directorships for listed entities only and excludes directorships

of all other types of entities, unless otherwise stated.

‘Former directorships (last 3 years)’ quoted above are

directorships held in the last 3 years for listed entities only

and excludes directorships of all other types of entities, unless

otherwise stated.

At the date of this report, no Directors held options over

ordinary shares.

Company SecretaryThe Company Secretary since January 2015 is Kevin Fine. He

is a current member of the Institute of Chartered Accountants

in Australia and New Zealand and began his career in Audit

and Advisory with firms including Arthur Andersen, Moores

Rowland and Ernst & Young. Kevin’s retail career began with

Shoprite Holdings Ltd (South Africa). He then spent 7 years

with the Specialty Fashion Group Ltd as Head of Finance and

7 years with OrotonGroup Ltd as Chief Financial Officer and

Company Secretary.

Special responsibilities of directorsAudit Committee

The members of the Audit Committee are as follows:

• Greg R Laurie (Chairman)

• John W Ingram

• Carole A Molyneux

• Stephen T Goddard (appointed 29 May 2018)

Remuneration and Human Resources Committee

The members of the Remuneration and Human Resources

Committee are as follows:

• Carole A Molyneux (Chairman)

• John W Ingram

• Greg R Laurie

• Stephen T Goddard (appointed 21 June 2018)

For

per

sona

l use

onl

y


Directors’ Report (continued)Meetings of directorsThe number of meetings of the Company’s Board of Directors (‘the Board’) and of each Board committee held during the year ended

30 June 2018, and the number of meetings attended by each director were:

DIRECTOR’S REMUNERATION AND HUMAN AUDIT MEETINGS RESOURCES COMMITTEE COMMITTEE Attended Held Attended Held Attended Held

John W Ingram 10 10 3 3 4 4

Greg R Laurie 10 10 3 3 4 4

Carole A Molyneux 9 10 3 3 3 4

Stephen T Goddard (appointed 01March 2018) 4 4 1 1 1 1

Anthony J Scali1 10 10 – – – –

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

1 Mr Anthony J Scali is not a member of the sub-committees, but was invited to attend these meetings and his attendance

was minuted.

Remuneration Report – AuditedThe remuneration report details the key management

personnel remuneration arrangements for the consolidated

entity, in accordance with the requirements of the Corporations

Act 2001 and its Regulations. For the purposes of the report,

key management personnel are defined as those persons

having authority and responsibility for planning, directing and

controlling the major activities of the business.

1. Details of key management personnel

The key management personnel of the consolidated entity

consisted of the following directors:

John W Ingram – Non-Executive Chairman

Greg R Laurie – Non-Executive Director

Carole A Molyneux – Non-Executive Director

Stephen T Goddard – Non-Executive Director (appointed on 01 March 2018)

Anthony J Scali – Managing Director

And the following executive:

Kevin Fine – Chief Financial Officer & Company Secretary

2. Remuneration strategy

The quality of Nick Scali Limited’s Directors and Executives is

a major factor in the overall performance of the consolidated

entity. To this end, the consolidated entity believes that an

appropriately structured remuneration strategy underpins a

performance based culture which in turn drives shareholder

returns. The remuneration strategy is designed to attract and

retain high quality and committed non-executive directors and

employees.

The executive remuneration and reward framework has two

components:

• fixed remuneration comprising of salary and superannuation

• variable at risk incentives comprising

– short term incentives in the form of a cash based reward

– long term incentives in the form of an equity reward

The incentives are designed to deliver value to executives

for performance against a combination of profitability and

achievement against strategic goals. Short term incentives

motivate employees to achieve outstanding performance

and are based on current year predetermined KPIs such as

profit after tax, and non-financial activities that achieve short

to medium term objectives, while long term incentives align

employees with shareholder interests and are based on

maintaining long term shareholder value using performance

measures such as EPS.

For

per

sona

l use

onl

y


Remuneration Report – Audited (continued)

3. Remuneration and Human Resources Committee

The Remuneration and Human Resources Committee

currently consists of the Non-Executive Board members and

is responsible for:

• Reviewing remuneration arrangements and succession

planning of senior management, including the Managing

Director and engaging external compensation consultants

if necessary.

• Reviewing and approving any discretionary component of

short and long term incentives for the Managing Director

and senior executives.

• Recommending to the Board any increase in the

remuneration of existing senior employees of the

consolidated entity for which Board approval is required.

• Recommending to the Board the remuneration of new

senior executives appointed by the consolidated entity.

• The setting of overall guidelines for Human Resources

policy, within which Senior Management determines

specific policies.

• Reviewing the performance of the Board and its sub-

committees, with the advice of external parties if appropriate.

The Committee has met twice in the last twelve months.

In addition, matters for consideration by the Committee

have been dealt with during various Board meetings, where

Remuneration and Human Resources Committee members

were in attendance.

4. Remuneration structure

In accordance with best practice corporate governance,

the structure of non-executive directors and executive

remunerations are separate.

4.1 Non-executive directors’ remuneration

Non-Executive Directors are paid an annual fee, which

is periodically reviewed. Non-Executive Directors do not

receive bonuses and they are not entitled to participate in the

Executive Performance Rights Plan.

Non-Executive Chairman and Directors’ fees were reviewed in

FY18 and changed with effect from 1 July 2017 to the annual

fees reflected below:

2018 2017 $ $

Base fee for Non-Executive Chairman 200,000 130,000

Base fee for Non-Executive Director 100,000 87,000

Fee for Audit Committee Chairman 17,000 15,000

Fee for Audit Committee Member 5,000 4,000

Fee for Remuneration and

Human Resources Committee Chairman 7,000 5,000

Fee for Remuneration and

Human Resources Committee Member 3,000 2,000

The pool for non-executive directors’ fees is capped at

$750,000 per year as approved by shareholders at the 2015

Annual General Meeting.

4.2 Executive remuneration

The consolidated entity provides appropriate rewards to attract

and retain key personnel. Base salaries, short and long term

incentives are established by the Remuneration and Human

Resources Committee for each executive having regard to the

nature of each role, the experience of the individual employee

and the performance of the individual and are then approved

by the Board. Market information and/or external consultants

are engaged as appropriate and are used to benchmark

executive remuneration.

4.2.1 Remuneration mix

The consolidated entity’s executive remuneration is structured as a mix of fixed and variable remuneration through at risk short term

and long term components. The mix of these components varies for different management levels.

The relative proportion and components of the senior executives total remuneration opportunity for the 2018 financial year was:

FIXED BASE VARIABLE TOTAL STI LTI % of % of % of % of $ Total $ Total $ Total $ Total

Anthony Scali 750,000 50 750,000 50 – – 1,500,000 100

Kevin Fine 410,000 53 205,000 26 164,000 21 779,000 100

4.2.2 Fixed remuneration

Fixed compensation is set to provide a base level of compensation which is appropriate to the position and responsibility and is

competitive in the market. Fixed compensation is reviewed annually with effect from 1 September each year, by the Remuneration and

Human Resources Committee by reviewing the consolidated entity and individual performance, skills, experience and comparative

market compensation and where appropriate, external advice.

The Company provides superannuation contributions in line with statutory obligations with benefits being delivered to the employee’s

choice of Superannuation Fund.


For

per

sona

l use

onl

y



4.2.3 Variable remuneration – Short-term incentives (STI)

Nick Scali operates short-term incentive (STI) programs that

reward KMPs on the achievement of predetermined key

performance indicators (KPIs) established for each financial

year, according to the accountabilities of their role and its

impact on the organisation’s performance.

KPIs include profit targets and personal performance criteria.

Using a profit target ensures variable reward is paid only when

value is created for shareholders and when profit meets or

exceeds the profit target recommended by the Remuneration

and Human Resources Committee for approval by the Board.

There are minimum levels of performance to trigger payouts

and the profit targets are linked to a sliding scale set at the

beginning of each financial year.

The STI is set as a variable annual incentive, where challenging

performance measures are set to incentivise superior

performance. The Managing Director may also recommend to

the Board discretionary bonuses in exceptional circumstances

to reward contributions from high performing employees. The

incentives are cash bonuses. The Remuneration and Human

Resources Committee is responsible for assessing whether

the KPIs are met. The following table shows the STI cash

bonus target and the amount achieved for each KMP in the

financial year 2018 and previous year:

4.2.4 Variable remuneration – Long-term incentives (LTI)

Long term incentives, in the form of the Executive Performance

Rights Plan (EPRP), are provided to employees in order to

align remuneration with the creation of shareholder value

over the long term. The LTI plan is only made available to

executives and other employees who are able to influence

the generation of shareholder value and have a direct impact

on the Company’s performance against relevant long term

performance hurdles.

To achieve this purpose, the Board has determined earnings

per share growth over a period of time to be the most

appropriate measure of performance. The plan operates to

grant to employees Rights to ordinary shares that will vest

after a period of three years from the effective date of the

grant subject to the achievement of specific performance

hurdles in relation to earnings per share (EPS) growth, which

is not subject to retesting. Earnings per share is based on

the Company’s total profit after tax and before non-recurring

items, all as determined by the Board.

Rights may also be granted in accordance with the EPRP as a

retention award where the performance condition is continued

employment with the Company to vesting date – no such

retention Rights were awarded during the 2018 financial year.

There is no exercise price for the shares and the employees

are able to exercise the Right up to two years following vesting,

after which time the Right will lapse.

2018 STI TARGET STI ACHIEVED * Financial Non Financial * Financial Non FinancialName Total $ Measures % Measures % Total $ Measures % Measures %

Anthony J Scali 750,000 80% 20% 438,000 48% 100%

Kevin Fine 205,000 100% – 98,400 48% –

* Financial Measures include net profit after tax

2017 STI TARGET STI ACHIEVED * Financial Non Financial * Financial Non FinancialName Total $ Measures % Measures % Total $ Measures % Measures %

Anthony J Scali 560,000 100% – 560,000 100% –

Kevin Fine 193,125 100% – 193,125 100% –

* Financial Measures include net profit after tax

Performance conditions in relation to Rights:

Company’s average percentage compound EPS growth per annum Percentage of Rights exercisable

Below 5% p.a. compound Nil

5% p.a. compound 50% of Rights exercisable

Greater than 5% and less than 10% p.a. compound Calculated on a pro rata basis between 50% and 100%

depending on the Company’s EPS performance

10% p.a. compound and above 100% of Rights exercisable


For

per

sona

l use

onl

y



The LTI entitlement of a senior executive is calculated as a

percentage of fixed annual remuneration as follows:

• Kevin Fine : 40%

The number of Rights granted to a senior executive is then

calculated by taking the relevant executive’s fixed annual

remuneration and multiplying it by the relevant predetermined

LTI entitlement percentage of fixed remuneration and then

dividing this by the Company’s volume weighted average

share price for the four week period prior to the date of the

release of the Company’s full year results.

If the performance hurdle is not met or if the participant

ceases to be employed by the Company, any unvested Rights

will lapse unless otherwise determined by the Board. In the

event of a takeover offer for the Company, the Rights may,

at the discretion of the Board, vest in accordance with an

assessment of performance with the performance period pro-

rated to the date of the takeover offer.

Employees who have been granted Rights are prohibited

from entering into a transaction to limit the economic risk of

such Rights whether through a derivative, hedge or similar

arrangement. In addition, employees are prohibited from

entering into any margin lending arrangements in respect of

shares in the Company where those shares are offered as

security for the lending arrangement.

4.3 Group performance

The table below sets out the financial performance of the Company over the past five years:

2014 2015 2016 2017 2018 CAGR (%)

Revenue $m 141.4 155.7 203.0 232.9 250.8 15.4

EBITDA $m 21.5 25.9 40.1 55.7 62.8 30.8

Net profit after tax $m 14.2 17.1 26.1 37.2 41.0 30.3

Earnings per share Cents 17.6 21.1 32.3 46.0 50.6 30.3

Ordinary dividends per share Cents 13.0 15.0 23.0 34.0 40.0 32.4

Share price at financial year end $ 2.45 3.10 4.68 6.09 6.73 28.7

Stores # 39 46 47 50 55

Basic earnings per share growth % 16.3 19.9 53.1 42.4 10.1

4.4 Remuneration outcomes

SALARY & SHORT TERM SHARE BASED POST EMPLOYMENT LONG TERM FEES BENEFITS PAYMENTS BENEFITS BENEFITS TOTAL Cash Share Long Service Incentive Rights Superannuation Leave 2018 $ $ $ $ $ $

Non-Executive Directors:

John W Ingram 200,000 – – – – 200,000

Greg R Laurie 109,589 – – 10,411 – 120,000

Carole A Molyneux 102,283 – – 9,717 – 112,000

Stephen T Goddard1 30,441 – – 2,892 – 33,333

Executive Directors:

Anthony J Scali 668,720 560,000 – 20,049 39,324 1,288,093

Other Key Management Personnel:

Kevin Fine 390,042 193,125 139,579 20,049 – 742,795

1,501,075 753,125 139,579 63,118 39,324 2,496,221

1 Stephen T Goddard was appointed as Non-Executive Director on 01 March 2018.


For

per

sona

l use

onl

y



4.4 Remuneration outcomes (continued)

SALARY & SHORT TERM SHARE BASED POST EMPLOYMENT LONG TERM FEES BENEFITS PAYMENTS BENEFITS BENEFITS TOTAL Cash Share Long Service Incentive Rights Superannuation Leave 2017 $ $ $ $ $ $

Non-Executive Directors:

John W Ingram 130,000 – – – – 130,000

Greg R Laurie 94,977 – – 9,023 – 104,000

Carole A Molyneux 87,671 – – 8,329 – 96,000

Nick D Scali1 28,760 – – 2,732 – 31,492

Executive Directors:

Anthony J Scali 680,048 560,000 – 19,615 13,528 1,273,191

Other Key Management Personnel:

Kevin Fine 398,842 193,125 94,314 19,615 – 705,895

1,420,298 753,125 94,314 59,314 13,528 2,340,578

1 Nick D Scali resigned as Non-Executive Director on 27 October 2016.

4.5 Service Agreements

NAME TERM OF AGREEMENT BASE SALARY INCLUDING SUPERANNUATION TERMINATION BENEFIT

Anthony Scali Ongoing commencing

Managing Director 24 May 2004 $750,000 –

Kevin Fine Ongoing commencing

Company Secretary and CFO 5 January 2015 $410,000 3 months base salary

4.6 Performance rights grantedThe terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of key executives in this financial year or future reporting years are as follows:

30 June 2018 VESTING AND EXERCISE FAIR VALUE VESTED AND VESTED AND EXERCISABLE PRICE PER RIGHT AT EXERCISED EXERCISED REFERENCE GRANT DATE1 DATE EXPIRY DATE ($) GRANT DATE ($) 30 JUNE 2018 30 JUNE 2017

FY18/20 31 Aug 2017 Aug 2020 30 Jun 2022 0.00 6.40 – –


FY17/19 22 Nov 2016 Aug 2019 30 Jun 2021 0.00 5.66 – –


FY16/18 4 Sep 2015 Aug 2018 30 Jun 2020 0.00 2.78 – –

1 The Grant Date is the date at which the performance rights are communicated to the employees. The effective date of the grant, from which the performance hurdles are measured, is the first day of the financial year in which the grant is made.

4.7 Performance rights holding BALANCE VESTED AND BALANCE30 June 2018 30 JUNE 2017 GRANTED1 EXERCISED LAPSED 30 JUNE 2018

Anthony Scali – – – – –

Kevin Fine 79,045 27,265 – – 106,310

BALANCE VESTED AND BALANCE30 June 2017 30 JUNE 2016 GRANTED1 EXERCISED LAPSED 30 JUNE 2017

Anthony Scali – – – – –

Kevin Fine 45,876 33,169 – – 79,045

1 All performance awards granted during the year are subject to EPS performance hurdles and remaining in employment until date of vesting.


For

per

sona

l use

onl

y



4.8 Additional disclosures relating to key management personnel

Interest in the Shares of the Company

The beneficial interest of each Director in the contributed equity of the Company are as follows:

BALANCE AT RECEIVED BALANCE AT THE START OF AS PART OF THE END OF THE YEAR REMUNERATION ADDITIONS DISPOSALS THE YEAR

Ordinary shares

John W Ingram 370,399 – – 60,399 310,000

Greg R Laurie 30,000 – – – 30,000

Stephen T Goddard – – 6,000 – 6,000

Scali Consolidated Pty Ltd 22,078,947 – – 11,039,473 11,039,474

22,479,346 – 6,000 11,099,872 11,385,474

Scali Consolidated Pty Ltd is a Director related entity of Mr Anthony J Scali.

This concludes the remuneration report, which has been audited.

Indemnity and insurance of officersDuring the financial year, the Company has indemnified all

the Directors and Executive Officers against certain liabilities

incurred as such by a Director or Officer, while acting in that

capacity. The premiums have not been determined on an

individual Director or Officer basis.

The Directors have not included details of the nature of the

liabilities covered or the amount of the premium paid in respect

of the Directors’ and Officers’ liability insurance contract, as

such disclosure is prohibited under the terms of the contract.

No other agreement to indemnify Directors or Officers have

been entered into, nor have any payments in relation to

indemnification been made, during or since the end of the

financial year, by the Company.

Indemnity and insurance of auditorTo the extent permitted by law, the Company has agreed to

indemnify its auditors, Ernst & Young, as part of the terms of

audit engagement agreement against claims by third parties

arising from the audit (for an unspecified amount) – except for

any loss in respect of any matters which are finally determined

to have resulted from Ernst & Young’s negligent, wrongful

or wilful acts or omissions. No payment has been made to

indemnify Ernst & Young during or since the financial year.

Proceedings on behalf of the CompanyNo person has applied to the Court under section 237 of the

Corporations Act 2001 for leave to bring proceedings on behalf

of the Company, or to intervene in any proceedings to which

the Company is a party for the purpose of taking responsibility

on behalf of the Company for all or part of those proceedings.

Officers of the Company who are former partners of Ernst & YoungThere are no officers of the Company who are former partners

of Ernst & Young.

Corporate Governance Statement Nick Scali Limited’s Corporate Governance Statement discloses

how the Company complies with the recommendations of the

ASX Corporate Governance Council (3rd Edition) and sets out

the Company’s main corporate governance practices. This

statement has been approved by the Board and is current as

at 30 June 2018. The Corporate Governance Statement of

Nick Scali Limited can be found on the Company’s website:

www.nickscali.com.au/corporate-governance.

Rounding of amountsThe Company is of a kind referred to in Class Order 2016/191,

issued by the Australian Securities and Investments Commission,

relating to ‘rounding-off’. Amounts in this report have been

rounded off in accordance with that Class Order to the nearest

thousand dollars, or in certain cases, the nearest dollar.

Non-audit servicesThe following non-audit services were provided by the entity’s

auditor, Ernst & Young Australia. The Directors are satisfied

that the provisions of non-audit services is compatible with the

general standard of independence for auditors imposed by the

Corporations Act 2001. The nature and scope of each type of

non-audit service provided means the auditor independence

was not compromised.

Ernst & Young Australia received or are due to receive the

following amounts for the provision of non-audit services:

$

Tax review services 17,500

New Zealand legal and tax advice 42,540

Other assurance related services 16,500

76,540

Auditor’s independence declarationThe Directors received the declaration from the auditor of

Nick Scali Limited and is included on page 16 of the Financial

Statements.


For

per

sona

l use

onl

y


AuditorErnst & Young continues in office in accordance with section 327 of the Corporations Act 2001.

Notification of auditor rotation requirementsOn 18 December 2015 the Board of Directors approved the extension of the Lead Audit Partner rotation period from five years to

seven years in accordance with section 324DAB of the Corporations Act 2001 and of the Corporations Legislative Amendment (Audit

Enhancement) Act 2012.

The decision was based on the directors determining that:

• the continuity of the audit partner is important given historic changes in CFO,

• the audit partner has a detailed understanding of the Company’s financial reporting processes and controls and this knowledge

is considered valuable to the Board of Directors,

• the two year extension does not give rise to a conflict of interest.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the directors

John W Ingram Anthony J Scali

Chairman Managing Director

16 August 2018

Sydney


BARTOLO Blackwood Low-line TV Unit

For

per

sona

l use

onl

y


Auditor’s Independence Declaration

Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: (632) 891 0307 Fax: (632) 819 0872 ey.com/ph

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Auditor’s Independence Declaration to the Directors of Nick Scali Limited As lead auditor for the audit of Nick Scali Limited for the financial year ended 30 June 2018, I declare to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Nick Scali Limited and the entities it controlled during the financial year.

Ernst & Young

Kathy Parsons Partner 16 August 2018

For

per

sona

l use

onl

y


CARIS 100% Leather Armchair

For

per

sona

l use

onl

y


2018 2017 NOTE $’000 $’000

Revenue from sale of goods 3 250,768 232,908

Cost of goods sold (93,562) (87,346)

Gross profit 157,206 145,562

Other income 3 1,948 1,574

Expenses

Marketing expenses (19,007) (19,188)

Employment expenses 4 (36,255) (34,707)

General and administration expenses (9,364) (7,682)

Property expenses 4 (29,935) (27,683)

Distribution expenses (1,027) (1,244)

Depreciation and amortisation 4 (3,780) (2,814)

Finance costs (928) (619)

Profit before income tax expense 58,858 53,199

Income tax expense 5 (17,879) (15,963)

Profit after income tax expense for the year attributable to the owners of

Nick Scali Limited 40,979 37,236

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Exchange differences on translation of foreign operations (1) –

Net change in the fair value of cash flow hedges taken to equity, net of tax 1,404 320

Other comprehensive income for the year, net of tax 1,403 320

Total comprehensive income for the year attributable to the owners of

Nick Scali Limited 42,382 37,556

CENTS CENTS

Basic earnings per share 6 50.6 46.0

Diluted earnings per share 6 50.6 46.0

Consolidated Statement of comprehensive incomeFOR THE YEAR ENDED 30 JUNE 2018

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes

For

per

sona

l use

onl

y


The above consolidated statement of financial position should be read in conjunction with the accompanying notes

Consolidated Statement of financial positionAS AT 30 JUNE 2018

2018 2017 NOTE $’000 $’000

AssetsCurrent assets

Cash and cash equivalents 9 36,585 39,944

Receivables 10 1,863 196

Inventories 11 36,175 29,204

Other financial assets 12 1,453 –

Prepayments 979 602

Total current assets 77,055 69,946

Non-current assets

Property, plant and equipment 13 91,888 66,847

Intangibles assets 14 2,378 2,378

Deferred tax 5 – 105

Total non-current assets 94,266 69,330

Total assets 171,321 139,276

LiabilitiesCurrent liabilities

Borrowings 15 20,362 –

Payables 16 44,055 40,732

Current tax liabilities 5 1,308 1,057

Provisions 17 2,953 3,125

Total current liabilities 68,678 44,914

Non-current liabilities

Borrowings 18 13,300 21,162

Provisions 19 4,880 2,816

Deferred tax 5 800 –

Total non-current liabilities 18,980 23,978

Total liabilities 87,658 68,892

Net assets 83,663 70,384

EquityIssued capital 20 3,364 3,364

Reserves 21 1,436 (24)

Retained profits 78,863 67,044

Total equity 83,663 70,384

For

per

sona

l use

onl

y


EQUITY CAPITAL CASH FLOW FOREIGN ISSUED BENEFIT PROFITS HEDGE EXCHANGE RETAINED TOTAL CAPITAL RESERVE RESERVE RESERVE RESERVE PROFITS EQUITY $’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 July 2016 3,364 140 78 (706) – 54,918 57,794

Profit after income tax expense for the year – – – – – 37,236 37,236

Other comprehensive income for the year,

net of tax – – – 320 – – 320

Total comprehensive income for the year – – – 320 – 37,236 37,556

Share-based payments (note 30) – 144 – – – – 144

Dividends paid (note 7) – – – – – (25,110) (25,110)

Balance at 30 June 2017 3,364 284 78 (386) – 67,044 70,384

Balance at 1 July 2017 3,364 284 78 (386) – 67,044 70,384

Profit after income tax expense for the year – – – – – 40,979 40,979

Other comprehensive income for the year,

net of tax – – – 1,404 (1) – 1,403

Total comprehensive income for the year – – – 1,404 (1) 40,979 42,382

Share-based payments (note 30) – 57 – – – – 57

Dividends paid (note 7) – – – – – (29,160) (29,160)

Balance at 30 June 2018 3,364 341 78 1,018 (1) 78,863 83,663

Consolidated Statement of changes in equityFOR THE YEAR ENDED 30 JUNE 2018

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

For

per

sona

l use

onl

y


Consolidated Statement of cash flowsFOR THE YEAR ENDED 30 JUNE 2018

2018 2017 NOTE $’000 $’000

Cash flows from operating activities

Receipts from customers 274,178 256,200

Payments to suppliers and employees (214,555) (197,612)

59,623 58,588

Interest received 750 915

Income taxes paid (17,323) (16,590)

Net cash from operating activities 8 43,050 42,913

Cash flows from investing activitiesPurchase of property, plant and equipment 13 (28,821) (14,278)

Net cash used in investing activities (28,821) (14,278)

Cash flows from financing activitiesPayment of dividends on ordinary shares 7 (29,160) (25,110)

Proceeds from borrowings 12,500 –

Interest paid (928) (619)

Net cash used in financing activities (17,588) (25,729)

Net (decrease)/increase in cash and cash equivalents (3,359) 2,906

Cash and cash equivalents at the beginning of the financial year 39,944 37,038

Cash and cash equivalents at the end of the financial year 9 36,585 39,944

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

For

per

sona

l use

onl

y


Basis of preparation

Note 1. Basis of preparationCorporate information

Nick Scali Limited (the Company or the parent) is a for profit

company limited by shares incorporated in Australia whose

shares are publicly traded on the Australian Stock Exchange.

Basis of preparation

These general purpose financial statements have been prepared

in accordance with Australian Accounting Standards and

Interpretations issued by the Australian Accounting Standards

Board (‘AASB’) and the Corporations Act 2001. These financial

statements also comply with International Financial Reporting

Standards as issued by the International Accounting Standards

Board (‘IASB’). The financial statements have been prepared

under the historical cost convention, except for derivative

financial instruments, which have been prepared at fair value.

The financial report was authorised for issue in accordance with

a resolution of the Directors on 16 August 2018.

Basis of consolidation

The consolidated financial statements comprise the financial

statements of the Company and its subsidiary as at 30 June

2018. A subsidiary is an entity that is controlled by the Company.

The Company controls an entity when it is exposed to, or has

rights to, variable returns from its involvement with the entity and

has the ability to affect those returns through its power over the

entity.

The financial statements of subsidiary are included in the

consolidated financial statements from the date on which

control commences until the date on which control ceases.

Intercompany transactions, balances and unrealised gains

on transactions between the Company and its subsidiary are

eliminated. Accounting policies of subsidiary are consistent with

the policies adopted by the Company.

Significant accounting judgements, estimates

and assumptions

In the process of applying the Company’s accounting policies,

management has made judgements, estimates and assumptions.

All judgements, estimates and assumptions made are believed to

be reasonable, based on the most current information available

to management. Actual results may differ from these judgements,

estimates and assumptions. Judgements, estimates and

assumptions which have the most significant effect on the

amounts recognised in the financial statements:

Operating Lease Commitments

The Company has entered into commercial property leases for its

stores. The Company has determined that the lessors retain all the

significant risks and rewards of ownership of these properties and

has thus classified the leases as operating leases.

Impairment of goodwill

The Company determines whether goodwill is impaired on an

annual basis. This requires an estimation of the recoverable

amount of the cash-generating unit to which the goodwill is

allocated. The assumptions used in this estimation of recoverable

amount and the carrying amount of goodwill is discussed in the

financial report.

Estimation of useful lives of assets

The estimation of the useful lives of assets has been based on

historical experience as well as consideration of lease terms (for

assets used in or affixed to leased premises) and replacement

policies (for motor vehicles). In addition, the condition of the

assets is assessed at least once per year and considered

against the remaining useful life. Adjustments to useful lives are

made when considered necessary.

Net realisable value of inventory

Inventories are valued at the lower of cost and net realisable

value. Weighted average cost is used to value inventories.

Costs incurred in bringing each product to its present location

and condition including freight, cartage and import duties are

included in the cost of finished goods.

Net realisable value is the estimated selling price in the ordinary

course of business, less estimated costs necessary to make the

sale. Judgment is applied in assessing the net realisable value.

New Accounting Standards and Interpretations not yet

mandatory or early adopted

The consolidated entity adopted all new and amended Australian

Accounting Standards and Interpretations that became

applicable in the current financial year. The adoption of these

Standards did not have a significant impact on the financial

results or Statement of financial position.

Australian Accounting Standards and Interpretations that have

recently been issued or amended but are not yet mandatory,

have not been early adopted by the company for the annual

reporting year ended 30 June 2018. The Company’s assessment

of the impact of these new or amended Accounting Standards

and Interpretations, most relevant to the Company, is set out

below.

AASB 9 Financial Instruments

This standard brings together all aspects of accounting for

financial instruments, and applies to annual reporting periods

beginning on or after 1 January 2018.

The Company early adopted the hedge accounting components

of the standard in relation to its forward exchange contracts, and

has adopted the standard in full on 1 July 2018.

Notes to the consolidated financial statementsFOR YEAR ENDED 30 JUNE 2018

For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Performance for the year

Note 2. Segment InformationThe Company has identified the Managing Director and the Board of Directors as the

chief operating decision makers. The Company has one reportable segment being the

retailing of furniture in Australia and New Zealand.

Note 3. RevenueRevenue

Sales Revenue 250,768 232,908

Other income

Interest income 750 915

Rent received 790 419

Sundry income 408 240

Total other income 1,948 1,574

Recognition and measurement – Revenue and income recognition

Revenue and income is recognised when it is probable that the economic benefit will flow to the Company and the revenue can be

reliably measured. Revenue is recognised for major business activities as follows:

Sale of goods

Revenue is recognised when the risks and rewards of ownership of the goods have passed to the buyer and the costs incurred in

respect of the transaction can be reliably measured. Risk and rewards are considered passed to the buyer at the time of delivery of

the goods to the customer. Revenue recognised equals fair value of the consideration received or receivable.

Notes to the consolidated financial statements for year ended 30 June 2018 (continued)

Note 1. Basis of preparation (continued)The adoption of the standard in full is not expected to result in

changes to the Company’s classification or measurement of its

financial instruments and the application of the expected credit

loss model is not expected to result in a significant impairment

of the Company’s receivables at 30 June 2018.

AASB 15 Revenue from contracts with Customers

This standard includes changes to revenue recognition based

on the principle that revenue is recognised when control of a

good or service transfers to a customer, and applies to annual

reporting periods beginning on or after 1 January 2018.

The standard was adopted by the Company on 1 July 2018

and is not expected to result in changes to the recognition

of revenue within the statement of financial performance. The

Company’s revenue is wholly derived from the sale of goods,

and this will continue to be recognized at the point in time

when the goods are delivered to the customer.

In adopting the standard, the Company assessed its potential

performance obligations under its sales contracts and

concluded that all performance obligations are satisfied upon

delivery of the goods to the customer.

AASB 16 Leases

This standard includes requirements to improve the recognition,

measurement and preparation of leases, and applies to annual

reporting periods beginning on or after 1 January 2019.

The standard will be adopted by the Company on 1 July 2019

and is expected to have a material impact on the financial

statements. The Company has yet to fully quantify this financial

impact.

For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 4. ExpensesProfit before income tax includes the following specific expenses:

Expenses

Property expenses 29,935 27,683

Other expenses includes:

Depreciation/amortisation of non-current assets

Land and buildings 823 771

Leasehold improvements 1,578 1,028

Fixtures and fittings 233 132

Motor vehicles 74 65

Office Equipment 1,072 818

3,780 2,814

Employee benefits expenses:

Salaries and wages 28,604 27,591

Superannuation expense 2,695 2,439

Share-based payments 280 144

Other1 4,676 4,533

36,255 34,707

1 Other Employee Benefits include commissions, payroll tax, workers compensation and contract staff.

Recognition and measurement – Expenses

Leases and operating leases

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so

as to reflect the risks and benefits incidental to ownership. Leases where the lessor retains substantially all the risks and benefits

of ownership of the asset are classified as operating leases. Operating leases are recognised as an expense in the statement of

comprehensive income on a straight-line basis over the lease term of the lease.

2018 2017Number of employees

Number of full-time and part-time employees at balance date 411 370


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 5. Income tax expenseIncome tax expense

Current income tax charge 17,401 16,275

Adjustments in respect of current income tax of previous years 193 (50)

Relating to origination and reversal of temporary differences 285 (262)

Aggregate income tax expense 17,879 15,963

Numerical reconciliation of income tax expense and tax at the statutory rate

Profit before income tax expense 58,858 53,199

Tax at the statutory tax rate of 30% 17,657 15,960

Adjustments in respect of current income tax of previous years 193 (50)

Adjustment for difference in overseas tax rates 1 –

Other items 28 53

Income tax expense 17,879 15,963

Deferred tax recognised comprises temporary differences attributable to:

Deferred capital gains (1,612) (1,612)

Property, plant and equipment (1,572) (798)

Inventory 202 449

Employee entitlements 1,092 1,055

Deferred lease incentives 1,101 592

Lease make good provisions 156 135

Cashflow hedge (Note 21) (436) 165

Other 269 119

Total deferred tax (liabilities)/assets (800) 105

Recognition and measurement – Income tax

Current tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to

the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted

by the reporting date.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and

their carrying amounts for financial reporting purposes. Deferred income tax, assets and liabilities are measured at the tax rates that

are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been

enacted or substantively enacted at the reporting date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and

deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the

deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 6. Earnings per shareProfit after income tax attributable to the owners of Nick Scali Limited 40,979 37,236

Number Number

Weighted average number of ordinary shares used in calculating basic earnings per share 81,000,000 81,000,000

Weighted average number of ordinary shares used in calculating diluted earnings per share 81,000,000 81,000,000

Cents Cents

Basic earnings per share 50.6 46.0

Diluted earnings per share 50.6 46.0

Recognition and measurement – Earnings per share

Basic earnings per share

Basic earnings per share (EPS) is calculated as net profit attributable to members, adjusted to exclude costs of servicing equity (other

than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share

Diluted EPS adjusts the Basic EPS to take account of the after tax effect of dividends and interest associated with dilutive potential

ordinary shares that have been recognised as expenses; and other costs associated with dilutive potential ordinary shares and the

weighted average number of shares assumed to have been issued for no consideration.

2018 2017 $’000 $’000

Note 7. Equity – DividendsDividends

Dividends paid during the financial year were as follows:

Final fully franked dividend for 30 June 2017: 20.0 cents (2016: 14.0 cents) 16,200 11,340

Special fully franked dividend for 30 June 2017: Nil (2016: 3.0 cents) – 2,430

Interim fully franked dividend for 30 June 2018: 16.0 cents (2017: 14.0 cents) 12,960 11,340

29,160 25,110

In addition to the above dividend, since the end of the financial year Directors have declared a final fully franked dividend of 24.0 cents

per fully paid ordinary share to be paid on 24 October 2018 out of retained profits at 30 June 2018.

Franking credits

Franking credits available at the reporting date based on a tax rate of 30% 30,996 26,169

Franking credits that will arise from the payment of the amount of the provision

for income tax at the reporting date based on a tax rate of 30% 1,488 1,374

Franking credits available for subsequent financial years based on a tax rate of 30% 32,484 27,543


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 7. Equity – Dividends (continued)Franking credits available for future reporting periods based on a tax rate of 30% 24,152 20,600

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

• franking credits that will arise from the payment of the amount of the provision for income tax at the reporting date

• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date

• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date

The tax rate at which paid dividends have been franked is 30% (30 June 2017: 30%).

Dividends declared and unpaid will be franked at the rate of 30% (30 June 2017: 30%).

2018 2017 $’000 $’000

Note 8. Reconciliation of profit after income tax to net cash from operating activitiesProfit after income tax expense for the year 40,979 37,236

Adjustments for:

Depreciation of property, plant and equipment 3,780 2,814

Net loss on disposal of property, plant and equipment – 111

Share-based payments 57 144

Interest expense classified as investing cash flows 928 619

Foreign currency translation (1) –

Net fair value change on derivatives 1,404 320

Change in operating assets and liabilities:

(Increase)/decrease in trade and other receivables (1,667) 1

Increase in inventories (6,972) (3,198)

Decrease in deferred tax assets 105 226

Increase in deferred tax liabilities 800 –

Increase in prepayments (377) (363)

Increase in value of other financial asset (1,453) (51)

Increase in trade and other payables 3,324 5,530

Increase/(decrease) in provision for income tax 251 (715)

Increase in other provisions 1,892 239

Net cash from operating activities 43,050 42,913


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Operating assets and liabilities

Note 9. Current assets – Cash and cash equivalentsCash at bank and on hand 36,585 39,944

Recognition and measurement – Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits with

an original maturity of six months or less. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash

and cash equivalents as defined above.

2018 2017 $’000 $’000

Note 10. Current assets – ReceivablesTrade debtors (i) 379 196

Other debtors (ii) 1,484 –

1,863 196

(i) Trade debtors are non-interest bearing and generally less than 30 day terms. Customers with balances past due but without

provision for impairment of receivables amount to $23,000 as at 30 June 2018 ($8,000 as at 30 June 2017).

(ii) Other debtors includes contributions from landlords and claims due from suppliers. These are non-interest bearing and have

repayment terms of up to 240 days.

Recognition and measurement – Trade and other receivables

Trade receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance

for doubtful debts is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are

written off when identified.

2018 2017 $’000 $’000

Note 11. Current assets – InventoriesFinished goods – at net realisable value 30,993 25,043

Stock in transit – at cost 5,182 4,161

36,175 29,204

During the year ended 30 June 2018, $156,304 (2017: $1,169,776) was recognised as an expense for inventories carried at net

realisable value. This was recognised in cost of goods sold.

Recognition and measurement – Inventories

Inventories are valued at the lower of cost and net realisable value. Weighted average cost is used to value inventories. Costs incurred

in bringing each product to its present location and condition includes purchase price plus freight, cartage and import duties. Net

realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

2018 2017 $’000 $’000

Note 12. Current assets – Other financial assetsDerivative hedge receivable (Note 23) 1,453 –


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 13. Non-current assets – Property, plant and equipmentLand and buildings – at cost 80,610 57,367

Less: Accumulated depreciation (2,978) (2,155)

77,632 55,212

Leasehold improvements – at cost 15,229 12,089


8,792 6,717

Fixtures and fittings – at cost 2,770 2,639


529 493

Motor vehicles – at cost 815 747

Less: Accumulated depreciation (538) (464)

277 283

Office equipment – at cost 10,619 9,048


4,658 4,142

91,888 66,847

Reconciliations

Reconciliation of the carrying amounts of property, plant & equipment at the beginning and end of the current financial year:

LAND & LEASEHOLD FIXTURES & MOTOR OFFICE BUILDINGS IMPROVEMENTS FITTINGS VEHICLES EQUIPMENT TOTAL $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 July 2016 46,864 5,253 534 193 2,649 55,493

Additions 9,119 2,583 93 172 2,311 14,278

Disposals – (91) (2) (17) – (110)

Impairment of assets (59) (14) – – – (73)

Depreciation expense (712) (1,014) (132) (65) (818) (2,741)

Balance at 30 June 2017 55,212 6,717 493 283 4,142 66,847

Additions 23,243 3,654 269 68 1,588 28,821

Impairment of assets 59 14 – – – 73

Depreciation expense (882) (1,592) (233) (74) (1,072) (3,853)

Balance at 30 June 2018 77,632 8,792 529 277 4,658 91,888

Land and buildings totalling $76.5m (2017: $46.9m) are used to secure bank loans relating to their purchase.


For

per

sona

l use

onl

y


Note 13. Non-current assets – Property, plant and equipment (continued)Recognition and measurement – Property, plant and equipment

All classes of property, plant and equipment are measured at cost, less accumulated depreciation and any impairment in value.

Depreciation is provided on a straight line basis on all property, plant and equipment.

Major depreciation periods are:

Buildings 20 – 40 years

Leasehold improvements 5 – 15 years

Furniture and fittings 3 – 15 years

Motor vehicles 6 years

Office equipment (including IT) 3 – 12 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. Leasehold

improvements are depreciated at the shorter of the useful life or the term of the lease. Land is not depreciated.

An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Company.

Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate

the carrying value may not be recoverable. For an asset that does not generate largely independent cash inflows, the recoverable

amount is determined for the cash-generating unit to which it belongs. If any such indication exists and where the carrying values

exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

2018 2017 $’000 $’000

Note 14. Non-current assets – Intangibles assetsGoodwill on acquisition of stores in Adelaide 2,378 2,378

Goodwill acquired through business combinations has been allocated to one individual cash generating unit for impairment testing,

being the Adelaide stores and related distribution centre. The recoverable amount of the Adelaide stores has been determined based

on a value in use calculation using cash flow projections.

As a result of the analysis, any reasonable sensitivity analysis will not result in any impairment.

It would require a significant adverse change in these assumptions to impact the existing non-impairment assessment. The significant

adverse change is not expected.

Recognition and measurement – Intangible assets

Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest

in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at

cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes

in circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of

the cash-generating unit to which the goodwill relates.

When goodwill forms part of a cash-generating unit and an operation within that unit is disposed of, the goodwill associated with

the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the

operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the portion

of the cash-generating unit retained.


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 15. Current liabilities – BorrowingsCommercial bills payable 20,362 –

Recognition and measurement – Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest

method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans

and borrowings. Borrowing costs are recognised as an expense when incurred, unless they are directly attributable to the acquisition,

construction or production of a qualifying asset whereby they are capitalised.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at

least 12 months after the reporting date.

2018 2017 $’000 $’000

Note 16. Current liabilities – PayablesTrade creditors (i) 11,578 7,603

Other creditors and accruals (ii) 6,080 9,235

Derivative hedge payable (iii) (Note 23) – 551

Customer deposits (iv) 26,397 23,343

44,055 40,732

Terms and conditions relating to the above financial instruments

(i) Trade creditors are non-interest bearing financial instruments and are normally settled on 30 day terms.

(ii) Other creditors are non-interest bearing financial instruments and are normally settled on 30 to 60 day terms.

(iii) Foreign currency forward contracts are initially recognised in the statement of financial position at cost and subsequently remeasured

to their fair value. Accordingly there is no difference between the carrying value and the fair value of derivative financial instruments

at reporting date.

(iv) Customer deposits relates to deposits received for orders not yet completed.

Recognition and measurement – Payables

Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent

liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the

Company becomes obliged to make future payments in respect of the purchase of these goods and services.

2018 2017 $’000 $’000

Note 17. Current liabilities – ProvisionsEmployee entitlements 2,723 2,634

Deferred lease incentives 230 491

2,953 3,125

Recognition and measurement – Provisions

Employee entitlements

Liabilities for annual leave and long service leave expected to be settled within 12 months of the reporting date are measured

as the amounts to be paid when the liabilities are settled.

Deferred lease incentive

The Company has received financial incentives from the lessor of certain properties. These are recorded as a liability and

amortised over the term of the lease.


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 18. Non-current liabilities – BorrowingsCommercial bills payable 13,300 21,162

Financing facilities available

Unrestricted access was available on the following lines of credit at the reporting date:

Total facilities

Bank loans expiring within 12 months 21,262 –

Bank loans expiring in greater 12 months 13,300 23,362

Bank guarantees 2,000 2,000

Interchangeable facilities, including letters of credit 5,000 5,000

41,562 30,362

Facilities used at reporting date:

Bank loans expiring within 12 months 20,362 –

Bank loans expiring in greater 12 months 13,300 21,162

Bank guarantees 1,477 1,678

Interchangeable facilities, including letters of credit 223 151

35,362 22,991

Facilities unused at reporting date:

Bank loans expiring within 12 months 900 –

Bank loans expiring in greater 12 months – 2,200

Bank guarantees 523 322

Interchangeable facilities, including letters of credit 4,777 4,849

6,200 7,371

Recognition and measurement – Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest

method. Fees paid on the establishment of loan facilities that are yield related are included as part of the carrying amount of the loans

and borrowings. Borrowing costs are recognised as an expense when incurred, unless they are directly attributable to the acquisition,

construction or production of a qualifying asset whereby they are capitalised.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at

least 12 months after the reporting date.


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 19. Non-current liabilities – ProvisionsEmployee entitlements 919 885

Deferred lease incentives 3,441 1,481

Lease make good 520 450

4,880 2,816

Recognition and measurement

Employee entitlements

Liabilities for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured as

the present value of expected future payments to be made in respect of services provided by employees up to the reporting date

using the projected unit credit method. Consideration is given to the expected future wage and salary levels, experience of employee

departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national

government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Lease make good

A provision has been made for the present value of anticipated costs of future restoration of leased properties. The provision includes

future cost estimates associated with restoring the premises to its condition at the time the Company initially leased the premises,

subject to fair wear and tear.

Deferred lease incentives

The Company has received financial incentives contributions from the lessor of certain properties. These are recorded as a liability and

amortised over the term of the lease.

Capital structure and finance cost

2018 2017 2018 2017 SHARES SHARES $’000 $’000

Note 20. Equity – Issued capitalAuthorised and fully paid ordinary shares 81,000,000 81,000,000 3,364 3,364

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the

number of and amounts paid on the shares held.

Capital risk management

The Board of Directors’ policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to

sustain future development of the business. The Board seeks to maintain a balance between the higher returns that might be possible

with higher levels of borrowings and the advantages and security afforded by a sound capital position. There were no changes in the

Company’s approach to capital management during the year.

The Company may look to raise capital when an opportunity to invest in a business is seen as value adding. The Company has

established specific borrowing facilities in relation to property purchases, which are secured over those specific properties. The

Company may consider using external equity when required for specific investments.

The Company pays dividends at the discretion of the Board. The dividend amount is based on market conditions and the profitability

of the Company.


For

per

sona

l use

onl

y


2018 2017 $’000 $’000

Note 21. Equity – ReservesCapital profits reserve 78 78

Cash flow hedge reserve 1,018 (386)

Foreign exchange reserve (1) –

Equity benefits reserve 341 284

1,436 (24)

Movements in reserves

EQUITY CAPITAL CASH FLOW FOREIGN BENEFITS PROFITS HEDGE EXCHANGE RESERVE RESERVE RESERVE RESERVE TOTAL $’000 $’000 $’000 $’000 $’000Balance at 1 July 2016 140 78 (706) – (488)

Amounts recognised for cash flow hedges – – (1,337) – (1,337)

Income tax on items taken directly to or transferred from equity – – (138) – (138)

Amounts transferred to non-financial assets – – 1,795 – 1,795

Share-based payment 144 – – – 144

Balance at 30 June 2017 284 78 (386) – (24)

Amounts recognised for cash flow hedges – – 1,430 – 1,430

Income tax on items taken directly to or transferred from equity – – (602) – (602)

Amounts transferred to non-financial assets – – 576 – 576

Foreign exchange reserve – – – (1) (1)

Share-based payment 57 – – – 57

Balance at 30 June 2018 341 78 1,018 (1) 1,436

Equity benefits reserve

This reserve is used to record the value of share-based payments provided to employees as part of their remuneration. Refer to Note

30 for further details of these plans.

Capital profits reserve

This reserve is comprised wholly of the surplus on disposal of assets that were acquired prior to the introduction of Capital Gains Tax

provisions.

Cash flow hedge reserve

This reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an

effective hedge.

Foreign exchange reserve

This reserve is used to recognise where assets and liabilities denominated in foreign currencies are translated at the functional currency

spot rates of exchange at the reporting date.


For

per

sona

l use

onl

y


Note 22. Financial instrumentsFinancial risk management objectives

The Company has exposure to foreign exchange risk, interest

rate risk, credit risk and liquidity risk.

The Company’s financial risk management policies are

established to identify and analyse the risks faced by the

Company, to set appropriate risk limits and controls, and

to monitor risks and adherence to limits. Risk management

policies and systems are reviewed regularly to reflect changes

in market conditions and the Company’s activities.

The Board of Directors has overall responsibility for the

establishment and oversight of the Company’s risk management

framework. The Board has established an Audit Committee,

which is responsible for developing and monitoring the

Company’s risk management policies. The Committee provides

regular reports to the Board of Directors on its activities.

The Company’s principal financial instruments comprise bank

loans, and cash and short-term deposits. The main purpose

of these financial instruments is to raise finance for and fund

the Company’s operations. The Company has various other

financial instruments such as trade debtors and trade creditors,

which arise directly from its operations. It is, and has been

throughout the year, the Company’s policy that no trading in

financial instruments is undertaken.

Market risk

Market risk is the risk that changes in market prices such

as foreign exchange rates and interest rates will affect the

Company’s income or the value of its holdings of financial

instruments. The objective of market risk management is to

manage and control exposure within acceptable parameters

while maximising return.

Foreign currency risk

All of the Company’s sales are denominated in either Australian

dollars or New Zealand dollars, whilst the majority of inventory

purchases are denominated in currencies other than Australian

dollars, primarily US dollars. Where appropriate the Company

uses forward currency contracts and options to manage its

currency exposures; and where the qualifying criteria are met,

these are designated as hedging instruments for the purposes

of hedge accounting.

As at 30 June 2018, the Company has trade payables of

$3,557,300 (2017: $1,210,531) denominated in US dollars and

stock in transit of $3,729,315 (2017: $3,176,985) denominated

in US dollars, all of which are covered by designated cash flow

hedge. As a result, the sensitivity to a reasonably possible

change in the US dollar exchange rate is minimal. The cash

flows relating to cash flow hedge positions held at year end are

expected to occur in July 2018 through to November 2018,

and the profit and loss is expected to be affected through cost

of sales as the hedged items (inventory) are sold to customers.

All forecast transactions subject to hedge accounting have

occurred or are highly likely to occur.

During the year, the Company designated foreign currency

forward contracts as hedges of highly probable purchases of

inventory in US dollars. The forecast purchases are expected to

occur during July 2018 through to November 2018.

The terms of the foreign currency forward contracts have been

negotiated to match the terms of the forecasted transactions.

Both parties of the contract have fully cash collateralised the

foreign currency forward contracts, and therefore, effectively

eliminated any credit risk associated with the contracts (both

the counter-party’s and the Company’s own credit risk).

Consequently, the hedges were assessed to be highly effective.

As at 30 June 2018, an unrealised gain of $1,403,000 (30 June

2017: an unrealised gain of $320,000) is in other comprehensive

income.

Interest rate risk

Financial instruments utilised that are subject to interest, and

therefore interest rate risk, are cash and commercial bills.

Management continually monitor the exposure to interest

rate risk. The following table sets out the carrying amount by

maturity of the financial instruments exposed to interest rate

risk at reporting date.


The fair value of the cash and commercial bills shown below are based on the face value of those financial instruments.

2018 2017

WEIGHTED WEIGHTED AVERAGE AVERAGE INTEREST RATE BALANCE INTEREST RATE BALANCE % $’000 % $’000

Floating rate

Cash – Assets less than one year 2.19 36,582 2.41 39,943

Commercial Bills – Liabilities less than one year 3.28 (20,362) – –

Commercial Bills – Liabilities between one and five years 3.28 (13,300) 3.94 (21,162)

Net exposure to cash flow interest rate risk 2,920 18,781

A reasonably possible increase/(decrease) in the interest rate of 100 basis points would result in an increase/(decrease) of profit before

income tax expense of $29,000 (2017: $188,000).

For

per

sona

l use

onl

y


Note 22. Financial instruments (continued)Credit risk

Credit risk refers to the risk that a counter-party will default on its contractual obligations resulting in a financial loss to the Company.

In most cases, the Company requires full and final payment either prior to, or upon delivery of the goods to the customer. In limited

cases where credit is provided, the Company trades on credit terms with recognised, creditworthy third parties. Customers who wish

to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing

basis with the result that the Company’s exposure to bad debts is not significant. There are no significant concentrations of credit risk

within the Company.

With respect to credit risk arising from financial assets of the Company, which comprise of cash and cash equivalents and receivables,

the Company’s maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised

financial assets is in the carrying amount, net of any provisions for doubtful debts, as disclosed in the statement of financial position

and notes to the financial statements. Cash and cash equivalents are only invested with corporations which are approved by the

Board of Directors.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach

to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under

both normal and stressed conditions.

The Company manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously

monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

The following tables detail the Company’s remaining contractual maturity for its financial instrument liabilities. The tables have been

drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are

required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and

therefore these totals may differ from their carrying amount in the statement of financial position.

REMAINING LESS THAN 3 TO 12 1 TO 5 OVER 5 CONTRACTUAL 3 MONTHS MONTHS YEARS YEARS MATURITIES $’000 $’000 $’000 $’000 $’0002018

Non-derivatives

Non-interest bearing

Trade Creditors 11,346 232 – – 11,578

Other creditors 6,080 – – – 6,080

Interest-bearing – variable

Borrowings 277 21,177 14,988 – 36,442

Total non-derivatives 17,703 21,409 14,988 – 54,100

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Other

creditors include cash flow hedges which are valued as outlined in Note 15.

REMAINING LESS THAN 3 TO 12 1 TO 5 OVER 5 CONTRACTUAL 3 MONTHS MONTHS YEARS YEARS MATURITIES $’000 $’000 $’000 $’000 $’0002017

Non-derivatives

Non-interest bearing

Trade Creditors 7,451 152 – – 7,603

Other creditors 9,235 – – – 9,235

Interest-bearing – variable

Borrowings 154 465 22,093 – 22,712

Total non-derivatives 16,840 617 22,093 – 39,550


For

per

sona

l use

onl

y


Note 23. Fair value measurementFair value hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised with the fair value hierarchy, described as

follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1: Quoted market prices in an active market (that are unadjusted) for identical assets or liabilities

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or

indirectly observable

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

At the reporting date the fair value of derivative financial instrument represented a derivative hedge receivable of $1,453,000 (2017:

derivative hedge payable of $551,000). All foreign currency forward contracts were measured at fair value using the Level 2 method.

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.

Recognition and measurement – Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to

their fair value at each reporting date. Recognition of the resulting gain or loss depends on whether the derivative is designated as a

hedging instrument and the nature of the item being hedged.

As appropriate, the Company designates derivatives as either hedges of the fair value of recognised assets or liabilities of firm

commitments (fair value hedges) or hedges of highly probable forecast transactions (cash flow hedges).

Recognition and measurement – Fair value measurement

Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the significance of

the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are

determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available

or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where

there is a significant change in fair value of an asset or liability from one year to another, an analysis is undertaken, which includes

a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Other Notes

2018 2017 $ $

Note 24. Key management personnel The aggregate compensation made to directors and other members of

key management personnel of the Company is set out below:

Short-term employee benefits 2,254,200 2,173,423

Long-term employee benefits 39,324 13,528

Post-employment benefits 63,118 59,314

Share-based payments 139,579 94,314

2,496,221 2,340,579


For

per

sona

l use

onl

y


2018 2017 $ $

Note 25. Remuneration of auditorsDuring the financial year the following fees were paid or payable for services

provided by Ernst & Young, the auditor of the Company, and its network firms:

Audit services – Ernst & Young

Audit or review of the financial statements 132,500 110,000

Other services – Ernst & Young

Tax review services 17,500 16,500

New Zealand legal and tax advice 42,540 –

Other assurance related services 16,500 –

76,540 16,500

209,040 126,500

Note 26. Contingent liabilitiesThere are no contingent liabilities as at 30 June 2018 (2017: Nil).

2018 2017 $’000 $’000

Note 27. CommitmentsOperating lease commitments

Committed at the reporting date but not recognised as liabilities, payable:

Within one year 22,570 24,748

One to five years 65,305 66,288

More than five years 13,875 16,044

101,750 107,080

Operating leases are in respect of the Group’s leased premises. Leases are entered into for varying terms. Rent reviews are based on

CPI increases or fixed increases. In some cases there are market reviews, particularly when exercising renewal options. A number of

the leases contain options to renew in favour of the Group.

Capital Commitments

At 30 June 2018, the Group had capital commitments of $945,000 (2017: $893,000) relating to the fitout of the new premises and

showrooms.

Note 28. Related party transactions Transactions with related parties

The following transaction occurred with related parties:

The Company leased premises at Auburn, in New South Wales, from entities controlled by Mr Anthony J Scali until 4 December 2017.

The following details the term and rent paid by the Company in respect of the premises leased. Lease rentals were determined on an

arm’s length basis. All other material terms of this lease were of a nature that would be typically entered into between unrelated parties.

Location: 242–248 Parramatta Road, Auburn, NSW

Term: 8 years, commencing 1 November 2016.

Rent and Outgoings: $359,566 (plus GST) during the period

On the 4 December 2017, the Company terminated the lease in accordance with the terms included therein, and purchased the

property from entities controlled by Mr Anthony J Scali for $22,000,000. The purchase price was determined on an arm’s length basis.


For

per

sona

l use

onl

y


Note 28. Related party transactions (continued)Other related party transactions

Dealings between the Company and the directors and personally-related entities were made during the year in the ordinary course

of business on normal commercial terms and conditions. The nature of these dealings were primarily the reimbursement of personal

expenses incurred on Company paid credit cards and the purchase of products for their own use.

Receivable from and payable to related parties

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

Note 29. Events after the reporting periodApart from the dividend declared as disclosed in Note 7, no other matter or circumstance has arisen since 30 June 2018 that has

significantly affected, or may significantly affect the Group’s operations, the results of those operations, or the Company’s state of

affairs in future financial years.

Note 30. Share-based paymentsThe Company has an Executive Performance Rights Plan which is provided for executives and other employees. In accordance with

the provisions of the plan, executives and employees are awarded rights to ordinary shares that will vest after a period of three years

subject to the achievement of specific performance hurdles in relation to earnings per share (EPS) growth, which is not retested. There

is no exercise price for the shares and the employees are able to exercise the right for up to two years following vesting, after which

time the right will lapse.

In the year ended 30 June 2018 rights to ordinary shares were issued which include performance hurdles requiring compound annual

EPS growth of between 5% and 10%. Under the grant, 50% of the rights are exercisable on the achievement of 5% EPS growth,

100% on the achievement of 10% EPS growth, and for the achievement of between 5% and 10% EPS growth the number of rights

exercisable is calculated on a pro-rata basis.

The expense recognised in relation to employee share rights during the year was $280,480 (2017: $199,755).

The following table reconciles the outstanding employee share rights granted under the Executive Performance Rights Plan at the

beginning and end of the financial year:

2018 2017 $ $

Balance at the start of the year 177,621 122,659

Granted 64,172 64,962

Exercised (34,418) (10,000)

Expired – –

Balance at the end of the year 207,375 177,621

Fair Value of Rights Granted

The fair value of rights at grant date is valued under risk neutral conditions. Under these conditions the value of the right is equivalent

to the share price reduced by the present value of dividends payable on the shares until vesting. The present value of the dividends is

deducted from the share price because the right holder is not entitled to dividends until the rights are exercised. The valuation assumes

that the rights are exercised as they vest.


For

per

sona

l use

onl

y


Note 30. Share-based payments (continued)The key assumptions used for determining fair value at grant date are as follows:

2018 2017Share Price at Grant Date $6.40 $5.66

Dividend Yield 6.0% 6.4%

Franking Rate 30.0% 30.0%

Implied pre-tax effective dividend yield 8.6% 9.0%

Recognition and measurement – Share-based payments

Share-based payments are measured at the fair value of the rights at grant date and are expensed on a straight line basis over the

vesting period, with a corresponding increase in equity, based on the Company’s estimate of the number of shares that will eventually

vest, giving consideration to the likelihood of employee turnover and the likelihood of non-market performance conditions being met.

At each reporting date the Company revises its estimate of the number of rights expected to vest. The impact of the revision of the

original estimates, if any, is recognised in profit or loss over the remaining vesting period, along with the reversal of any previous charges

relating to rights which may have lapsed.

Note 31. Parent entity information Set out below is the supplementary information about the parent entity.

PARENT 2018 2017 $’000 $’000

Statement of comprehensive income

Profit after income tax expense 41,010 37,236

Total comprehensive income 42,414 37,556

Statement of financial position

Total current assets 77,556 69,946

Total assets 170,297 139,276

Total current liabilities 67,636 44,914

Total liabilities 86,602 68,892

Equity

Issued capital 3,364 3,364

Capital profits reserve 78 78

Hedging reserve – cash flow hedges 1,017 (386)

Equity benefits reserve 341 284

Retained profits 78,895 67,044

Total equity 83,695 70,384

Recognition and measurement – Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Nick Scali Limited (‘company’ or ‘parent

entity’) as at 30 June 2018 and the results of all subsidiaries for the year then ended. Nick Scali Limited and its subsidiaries together

are referred to in these financial statements as the ‘consolidated entity’.

Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the

consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect

those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is

transferred to the consolidated entity. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated.

Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.


For

per

sona

l use

onl

y


Note 32. Controlled EntitiesSubsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the

accounting policy described in this financial report.

EQUITY HOLDINGNAME OF ENTITY COUNTRY OF INCORPORATION CLASS OF SHARES 2018 2017 % %Nick Scali (New Zealand) Limited New Zealand Ordinary 100 100

Note 33. Summary of other significant accounting policiesCurrent and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal operating

cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting year; or the asset

is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting

year. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the purpose

of trading; it is due to be settled within 12 months after the reporting year; or there is no unconditional right to defer the settlement of

the liability for at least 12 months after the reporting year. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Other taxes

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (‘GST’) except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST

is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the

statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing

and financing activities, which is recoverable from, or payable to the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Foreign currency translation

Both the functional and presentation currency of the Company is Australian dollars ($). Items included in the financial report of the

Company are measured using that functional currency.

Foreign currency transactions

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date

of the transaction or at the hedged rate if qualifying financial instruments have been used to reduce exposure. Monetary assets and

liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date or hedged rates.

All exchange differences are recognised in the statement of comprehensive income, except when deferred in equity as qualifying cash

flow hedges.


For

per

sona

l use

onl

y


Note 33. Summary of other significant accounting policies (continued)Derecognition of financial assets and financial liabilities

Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

• the rights to receive cash flows from the asset have expired;

• the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without

material delay to a third party under a ‘pass-through’ arrangement; or

• the Company has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks

and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has

transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially

all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s

continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured

at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Company could

be required to repay.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial

liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially

modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability,

and the difference in the respective carrying amounts is recognised in profit or loss.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that

an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of

the amount of the obligation.

When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement

is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is

presented in the income statement net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific

to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

Contributed equity

Ordinary share capital is recognised at the fair value of the consideration received by the Company.

Any transaction cost arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds

received, net of tax.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

Rounding of amounts

The Company is of a kind referred to in Class Order 2016/191, issued by the Australian Securities and Investments Commission,

relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Class Order to the nearest thousand

dollars, or in certain cases, the nearest dollar.


For

per

sona

l use

onl

y

TONO Concrete/Acacia Dining Table

In the directors’ opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations

Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International

Accounting Standards Board as described in Note 1 to the financial statements;

• the attached financial statements and notes give a true and fair view of the Company’s financial position as at 30 June 2018 and

of its performance for the financial year ended on that date; and

• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and

payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the Directors

John W Ingram Anthony J Scali

Chairman Managing Director

16 August 2018

Sydney

Directors’ Declaration


For

per

sona

l use

onl

y


Independent Auditor’s Report to the Members of Nick Scali Limited

Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au


Independent Auditor's Report to the Members of Nick Scali Limited

ReportontheAuditoftheFinancialReport

Opinion

We have audited the financial report of Nick Scali Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2018 and of its consolidated financial performance for the year ended on that date; and

b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

BasisforOpinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KeyAuditMatters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.

For

per

sona

l use

onl

y


Independent Auditor’s Report to the Members of Nick Scali Limited (continued)


Inventory provision for obsolescence

Why significant How our audit addressed the key audit matter

The Group held an inventory balance at 30 June 2018 of $36.2 million with associated provisions for Inventory obsolescence of $0.7 million.

Given the significance of the judgements the Company exercised in applying its policy to determine the value of provisions to be carried for inventory obsolescence, this was considered to be a key audit matter.

We evaluated the Company’s assumptions used in determining the provision for inventory obsolescence by analysing the level of provisioning on a category of inventory basis. We compared the percentage of inventory provided, by category to prior periods, determining if changes in the percentages provided were appropriate based on recent and expected retail selling prices.

We compared the Inventory provision to total inventory amounts written off in the year.

InformationOtherthantheFinancialReportandAuditor’sReportThereon

The directors are responsible for the other information. The other information comprises the information included in the Company’s 2018 Annual Report, but does not include the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s report.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

ResponsibilitiesoftheDirectorsfortheFinancialReport

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. F

or p

erso

nal u

se o

nly




In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor'sResponsibilitiesfortheAuditoftheFinancialReport

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the

disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

For

per

sona

l use

onl

y




We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

ReportontheAuditoftheRemunerationReport

OpinionontheRemunerationReport

We have audited the Remuneration Report included in pages 9 to 14 of the directors' report for the year ended 30 June 2018.

In our opinion, the Remuneration Report of Nick Scali Limited for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Ernst & Young

Kathy Parsons Partner Sydney 16 August 2018

For

per

sona

l use

onl

y


Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows.

The information is current as at 27 July 2018.

Distribution of equitable securities

Analysis of number of equitable security holders by size of holding:

NUMBER OF HOLDERS OF ORDINARY SHARESShareholders Category

1 to 1,000 1,3801,001 to 5,000 1,5585,001 to 10,000 39610,001 to 100,000 268100,001 and Over 20Total 3,622

Equity security holders

Twenty largest quoted equity security holders

The names of the twenty largest security holders of quoted equity securities are listed below:

ORDINARY SHARES % OF TOTAL NUMBER HELD SHARES ISSUEDHSBC Custody Nominees (Australia) Limited 19,916,034 24.59

Scali Consolidated Pty Limited 11,039,474 13.63

Kuka Investment and Management Co. Limited 11,039,473 13.63

Citicorp Nominees Pty Limited 9,351,235 11.54

J P Morgan Nominees Australia Limited 5,578,200 6.89

National Nominees Limited 3,754,712 4.64

Molvest Pty Ltd 1,300,000 1.60

BNP Paribas Nominees Pty Ltd 1,250,568 1.54

BNP Paribas Nominees Pty Ltd 1,123,727 1.39

Grahger Retail Securities Pty Ltd 1,000,000 1.23

Brispot Nominees Pty Ltd 417,370 0.52

Netwealth Investments Limited 326,080 0.40

UBS Nominees Pty Limited 291,583 0.36

Lan Trading Capital Pty Ltd 289,571 0.36

Bond Street Custodians Limited 225,280 0.28

Mr Yonatan Widjaya & Mrs Mela Widjaya 150,000 0.19

BNP Paribas Nominees Pty Ltd 146,268 0.18

Cashmere Dell Pty Ltd 122,111 0.15

Mrs Susan Humphrey 104,000 0.13

Dunecove Pty Limited 100,000 0.12

67,525,686 83.37

Shareholder Information

For

per

sona

l use

onl

y

Shareholder Information (continued)

ORDINARY SHARES % OF TOTAL NUMBER HELD SHARES ISSUEDSubstantial holders

Substantial holders in the Company are set out below:

Scali Consolidated Pty Limited 11,039,474 13.63

Kuka Investment and Management Co. Limited 11,039,473 13.63

Perpetual Limited 10,960,816 13.53

Airlie Funds Management Pty Limited 5,922,920 7.31

38,962,683 48.10

Voting rights

Ordinary shares

All ordinary shares carry one vote per share without restriction.

There are no other classes of equity securities.

SLOAN Solid Oak Console Table


For

per

sona

l use

onl

y


ANITA and LAINE Dining Chairs

For

per

sona

l use

onl

y


Nick Scali LimitedABN 82 000 403 896

Store Locations

Corporate Information

Registered OfficeLevel 7, Triniti 2

39 Delhi Road

North Ryde NSW 2113

Telephone: 02 9748 4000

Website: www.nickscali.com.au

Company SecretaryKevin Fine

AuditorsErnst & Young

Ernst & Young Building

200 George Street

Sydney NSW 2000

SolicitorsAshurst

Level 11, 5 Martin Place

Sydney NSW 2000

Share RegistryLink Market Services Limited

Level 12, 680 George Street

Sydney NSW 2000

Stock ExchangeNick Scali Limited shares are

listed on the Australian

Securities Exchange

The home exchange is Sydney

ASX code: NCK

Annual General MeetingThe Annual General Meeting

will be held at 12H00 on

Tuesday 23rd October 2018

At Nick Scali Limited Head Office

New South Wales

Alexandria

Auburn

Bankstown

Belrose

Campbelltown

Campbelltown Clearance

Caringbah

Castle Hill

Casula

Kotara

Marsden Park

Moore Park

Penrith

Prospect Clearance

Rutherford

Tuggerah

Warrawong

West Gosford

Australian Capital

Territory

Fyshwick

Fyshwick Clearance

Victoria

Chirnside

Essendon

Frankston

Geelong

Moorabbin

Nunawading

Preston

Richmond

Springvale

Springvale Clearance

South Wharf

Taylors Lakes

South Australia

Gepps Cross

Glynde

Marion

Mile End

Tasmania

Hobart

Queensland

Aspley

Bundall

Cairns

Fortitude Valley

Jindalee

Macgregor

Maroochydore

Morayfield1

North Lakes

Robina

Toowoomba

Townsville

Western Australia

Cannington

Jandakot

Joondalup

Midland

O’Connor

Osborne Park

New Zealand

Mt Wellington

1 Morayfield opened in July 2018

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

MAZARA Fabric Modular with Electric Recliner and Terminal PARQUET Dining Table and TV Unit

LISA Leather Dining Chair LAINE Fabric Dining Chair HECTOR Coffee Table Nest

LOUIE Patchwork Floor Rug LILA Floor Lamp

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

Documents

For personal use only - Nick Scali · Related party transactions 38 Note 29. Events after the reporting period 39 Note 30. Share-based payments 39 ... (Auckland, NZ). Following a